Bill Allows Small Businesses Across Industries Band Together On Insurance

Article courtesy of MIRS for SBAM’s Lansing Watchdog newsletter

Committee testimony kicked off Wednesday on a proposal to allow multiple small business owners, regardless of what industry they’re in, to group together to buy health insurance policies for their workers.

Small Business Association of Michigan (SBAM) officials believe SB 1011 works because it allows multiple businesses to team up in a joint risk pool – where premiums are saved to take on medical claims – making their employer-sponsored health insurance offering cheaper.

“If you’re to take an employer like, say, the state of Michigan, they have enough employees to where they have their own risk pool. They do their own benefit design. They have health and wellness initiatives to try to lower costs and utilization. They are able to negotiate because they have this big purchaser power,” Calley said on the June 1 MIRS Monday Podcast. “Most small businesses are nowhere near big enough to be able to create their own risk pool … They’re just buying insurance off the rack, and it’s really expensive.”

Calley said that the key is that by allowing multiple industries to pool together, small business owners will have the same insurance-buying tools that large employers have currently.

SBAM oversaw its own association health plan (AHP) for members in fall 2018 until a federal Department of Labor rule struck such programs down in March 2019.

The federal rule permitted small employers and working owners to essentially band together, qualifying as a group health plan. However, arguments surfaced that the practice allowed multi-industry employers to purchase “skinny” plans that were inadequate.

Testifying on the bill in the Senate Health Policy Committee – which would require AHPs made in the state to comply with the federal Affordable Care Act (ACA) – was SBAM’s chief revenue officer, Michelle Beebe.

Beebe said that when SBAM was able to establish its own AHP, in a very short time, it was able to provide access to affordable health care to hundreds of employers and thousands of employees.

“The impact was incredibly real. Lower costs compared to traditional small group health plans, greater predictability year over year on claims experienced,” Beebe said. “And most importantly, access to coverage that many employers otherwise can’t offer today. We heard directly from members that this wasn’t just a benefit. It was a lifeline.”

Another testifier was Greg Brogan, a SBAM member and owner of an East Lansing-based employee benefits and insurance management firm. He described how many of his clients have experienced annual health care increases exceeding 20%, far outpacing inflation and wage growth.

Brogan said he now has clients whose family health insurance premiums are more than $2,500 monthly.

“That’s comparable to a mortgage payment on a very nice home,” he said. “Think about that for a moment. Employers are increasingly being asked to spend as much on health insurance as they would to buy one of their employees a house.”

Beebe said on Tuesday that she golfed with a certified public accountant with 18 employees. She said he’s already removed himself from offering employer-sponsored coverage.

Without employer-sponsored coverage, workers have the option of purchasing coverage on the Affordable Care Act (ACA) marketplace. Also in the Senate Health Policy Committee, bills creating Michigan’s own marketplace – SB 973, SB 974, SB 975, SB 976, SB 977 and SB 978 – passed by a party-line.

“There’s no doubt that as employers are covering less and less of health insurance here in the state, more individuals are getting pushed into the individual market, and it’s not an affordable place right now to buy insurance because of the decisions that have been made at the federal level,” said Senate Health Policy Chair Kevin Hertel (D-St. Clair Shores) last week.

Supporters of Michigan leaving behind the ACA marketplace to instead create its own say that it will give Michigan the freedom to give residents more time to enroll in plans, offer incentives and risk pool contributions to help insurers keep premiums low and to maintain user fees that would otherwise go to the federal government.

Opponents are concerned that a state-run system might not be the most secure, vulnerable to technical glitches, bad contractors and fraud.

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